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FOMC Minutes Cause Colorado Mortgage Rates to Rise

RJ Baxter (First Mortgage Corp) — Fri, 03 Sep 2010 09:16:58 -0400

Home affordability took a slight hit this week after the Federal Reserve's release of its August 10 meeting minutes.

The "Fed Minutes" is a lengthy, detailed recap of a Federal Open Market Committee meeting, not unlike the minutes published after a corporate conference, or condo association gathering. The Federal Reserve publishes its meeting minutes 3 weeks after a FOMC get-together.

The minutes are lengthy, too.

At 6,181 words, August's Fed Minutes is thick with data about the economy, its current threats, and its deeper strengths. The minutes also recount the conversations that, ultimately, shape our nation's monetary policy.

It's for this reason that mortgage rates are rising. Wall Street didn't see much from the Fed that warranted otherwise.

Among the Fed's observations from its minutes:

On the economy : The recession was deeper than previously believed
On jobs : Private employment is expanding slowly
On housing : The market was "quite soft" in June

Now, none of this was considered "news", per se. If anything, investors were expecting for harsher words from the Fed; a bleaker outlook for the economy. And, because they didn't get it, monies moved to stocks and mortgage bonds lost.

That caused mortgage rates to rise.

The Fed meets 8 times annually. Its next meeting is scheduled for September 21, 2010. Until then, mortgage rates should remain low and home affordability should remain high. There will be ups-and-downs from day-to-day, but overall, the market is favorable.

See Today's Colorado Mortgage Rates & find out more about getting a Colorado Home Loan

RJ Baxter First Mortgage Corp

Branch Manager

303-670-0137 (direct)

27902 Meadow Drive, Suite 120

Case-Schiller Shows Increase in Home Values for 16th Straight Month

RJ Baxter (First Mortgage Corp) — Fri, 03 Sep 2010 09:13:09 -0400

According to the Standard & Poors Case-Shiller Index, home values rose 5 percent in June versus the month prior, and 4 percent from a year earlier. It's the 16th consecutive month in which Case-Shiller reported an increase in home values and the third straight month of outstanding results.

That said, homeowners and home buyers in Evergreen would do well to temper Case-Shiller enthusiasm. The June figures are issued on 60-day delay and, over the last 60 days, housing data has been lackluster at best.

Existing Home Sales are down 27 percent
New Home Sales are down 12 percent
Homebuilder confidence is down

Stories like these highlight a key weakness of the Case-Shiller Index -- it's out of date as soon as it's published. Because of this, the Case-Shiller Index relevance to everyday Americans is muted. People don't buy homes in the "60 days ago" real estate market, after all.

June is ancient real estate history.

However, the Case-Shiller Index does have its place. As the most widely-followed, private-sector housing tracker, the index is used to help make policy decisions and to shape Wall Street's expectations of the economy. This means that a strong Case-Shiller reading can cause mortgage rates to rise, and a weak Case-Shiller reading can cause rates to fall.

Tuesday, mortgage rates fell.

See Today's Colorado Mortgage Rates & find out more about getting a Colorado Home Loan

RJ Baxter First Mortgage Corp

Branch Manager

303-670-0137 (direct)

27902 Meadow Drive, Suite 120

Mortgage Rate Volatility Surging This Week

RJ Baxter (First Mortgage Corp) — Tue, 31 Aug 2010 11:07:54 -0400

Colorado Mortgage Ratesare low right now but pinning them down this week could be a challenge. As Labor Day Weekend nears and Wall Streeters take their head-start on the holiday, trading volume will fall, which will cause Colorado mortgage rates to get jumpy.

As mortgage rates change, so does the long-term cost of owning a home. Every 1/8 percent adjustment changes a household budget.

Meanwhile, the relationship between "vacation days" and mortgage rate volatility is an interesting one; based more in scarcity than market fundamentals.

Rates tend to get volatile near holidays because of two inter-related facts:

Conforming Colorado mortgage rates are based on the price of mortgage-backed bonds
Mortgage-backed bonds can't trade without a buyer and a seller at a specific price

So, as the week progresses and more traders leave for their respective "extended" 3-day weekends, there's fewer buyers and sellers left on Wall Street to connect for a trade. As a result, mortgage bond prices move across larger gaps than on a "normal" day which, in turn, translates into faster, larger changes in rates.

This phenomenon can be exaggerated during periods of economic uncertainty -- like what we're in now -- and, furthermore, there's a bevy of important data set for release this week including the FOMC Minutes, inflation data, and August jobs figures.

In other words, rates would have been volatile without the vacation week. The presence of Labor Day just piles on.

Colorado Mortgage rates may rise this week, or they may fall. Either way, if you have a chance to lock something favorable and within your budget, consider doing it. Rates are at all-time lows and likely won't last.

See Today's Colorado Mortgage Rates & find out more about getting a Colorado Home Loan

RJ Baxter First Mortgage Corp

Branch Manager

303-670-0137 (direct)

27902 Meadow Drive, Suite 120

Colorado Mortgage Rates Quote

Colorado Mortgage Rates for August 30, 2010 - Rate Update by RJ Baxter

RJ Baxter (First Mortgage Corp) — Mon, 30 Aug 2010 15:41:50 -0400

Mortgage markets improved last week despite a major mortgage bond sell-off Friday afternoon (when investors sell bonds, mortgage rates go up). Prior to the jump, conforming mortgage rates had cut new, all-time lows by Thursday, only to lose up to 0.250 percent on the last day of the week.

Meanwhile, the same type of news that drove rates lower Monday through Thursday also contributed to rates rising Friday -- revised projections for the U.S. economy.

Early in the week, "bad" news piled on which, in turn, lowered expectations for the economy and pushed mortgage rates down:

Existing Home Sales dropped 27% from June
Single-Family New Home Sales dropped 12% from June
Purchases of "big ticket" items plunged

Then, on Friday, two events revised the market's expectations back higher:

Q2 GDP was revised lower, but not as low as had been expected
Fed Chairman Ben Bernanke said the economy will keep expanding through the end of the year and into 2011

When Chairman Bernanke talks, markets listen. His comments about the U.S. economy helped fuel that late-Friday surge in mortgage rates last week.

This week, the momentum could continue -- depending on the data.

There's a lot for markets to digest this week including key inflation figures from the government; home value data from Case-Shiller; Fed Minutes from the Federal Reserve; and, the always-important jobs report due Friday.

Since April, mortgage rates have been on a downward trajectory and that may continue this week. Or, it may not. If you own a home and haven't talked to your loan officer about a refinance, now is as good a time as any -- rates are at historic lows and could rebound at any time.

Last June, mortgage rates rose 1.125% in 10 days. Under the right circumstances, it could happen again.

See Today's Colorado Mortgage Rates & find out more about getting a Colorado Home Loan

RJ Baxter First Mortgage Corp

Branch Manager

303-670-0137 (direct)

27902 Meadow Drive, Suite 120

Home Affordability in Colorado - Rankings For 225 Metropolitan Statistical Areas

RJ Baxter (First Mortgage Corp) — Mon, 30 Aug 2010 15:30:53 -0400

With home prices holding firm and colorado mortgage rates still dropping, home affordability is reaching new heights.

According to the quarterly Home Opportunity Index as published by the National Association of Home Builders, more than 72 percent of all new and existing homes sold between April-June 2010 were affordable to families earning the national median income.

It's a slightly higher reading as compared to last quarter, and the second highest reading in the survey's history.

As with all aspects of real estate, however, home affordability varies by locale.

For example, 97.2% of homes sold in Syracuse were affordable for families making the area's median income, earning the New York city its first "Most Affordable Major City" designation. Indianapolis was the first quarter winner.

On the opposite end of the spectrum, the "Least Affordable Major City" title went to the New York-White Plains, NY-Wayne, NJ area for the 9th consecutive quarter. Just 19.9% of homes are affordable to families earning the local median income, down 1 percent from last quarter.

The rankings for all 225 metro areas are viewable on the NAHB website but regardless of where you live, buying a home is as affordable as it's ever been in history. Furthermore, because home values are in recovery and mortgage rates may rise, the market is ripe for home buyers.

All things equal, buying a home may never be this inexpensive again. If you were planning to purchase later this year, you may want to move up your time frame.

See Today's Colorado Mortgage Rates & find out more about getting a Colorado Home Loan

RJ Baxter First Mortgage Corp

Branch Manager

303-670-0137 (direct)

27902 Meadow Drive, Suite 120

New Home Sales Plummet In July

RJ Baxter (First Mortgage Corp) — Thu, 26 Aug 2010 10:40:12 -0400

One day after the National Association of Realtors released the softest Existing Home Sales report since 1995, the U.S. Census Bureau released a similarly-weak New Home Sales report.

Americans bought just 276,000 newly-built homes in July. That marks the fewest units sold since the government started keeping records in 1963.

In addition, although new home inventory actually dropped 2,000 units in July, the slowing sales pace still managed to push the national supply higher by 1.1 months. At July's rate of sales, the nation's new home inventory would be exhausted in just about 9 months.

None of this news should surprise you, though. It's all been foreshadowed for weeks.

First, Single-Family Housing Starts have dropped in every month since April. A "housing start" is a when a home starts construction and, because fewer homes are under construction, we should expect fewer homes to be sold.

Second, Building Permits are down. The number of new permits peaked in March and have fallen 23 percent since.

And, lastly, home builder confidence ranks at its lowest levels since early-2009. A contributing factor in that pessimism is dwindling buyer foot traffic.

Regardless, there's two sides to the story. Although the New Home Salesdata looks bad for builders, it can be terrific for you. This is because new homes are more likely to be discounted when the sales cycle favors buyers.

Coupled with ultra-low colorado mortgage rates, the cost of buying a newly-built home in Denver may have just become cheaper.

See Today's Colorado Mortgage Rates & find out more about getting a Colorado Home Loan

RJ Baxter First Mortgage Corp

Branch Manager

303-670-0137 (direct)

27902 Meadow Drive, Suite 120

Home Sales in Colorado and Nationwide Plummet

RJ Baxter (First Mortgage Corp) — Wed, 25 Aug 2010 15:25:59 -0400

The number of home resales plunged by 1.4 million units in July, according to the National Association of Realtors®' Existing Home Sales report.

It's a drop of 27 percent from June; single-family Home Sales in Colorado are at the report's lowest levels since May 1999.

Furthermore, because of the sharp drop in sales volume, home inventories are spiking.

Homes for sale nationwide fell just short of 4 million units in July and, at the current sales paces, it would take 12.5 months for the existing inventory to be absorbed.

Home supply was just 8.9 months in June.

For home sellers in Evergreen , the Existing Home Sales report is a bit of bad news. Fewer sales and larger inventories put negotiation leverage in the hands of the buyers which, in turn, creates downward pressure on home prices. It may also increase time-on-market.

For home buyers, however, the data is decidedly welcome. After a stimulus-driven spring buying season that favored sellers, the summer and early-fall market seem to favor buyers. More choices and more leverage is a positive.

It helps that home affordability is up, too.

Although there's reports that home values are rising, their modest gains are more than countered by the ongoing rally in mortgage rates. Freddie Mac says that 30-year fixed rate mortgage rates are at their lowest levels in history and, at today's rates, every one-eighth drop in mortgage rates roughly offsets a 1.5% increase to home price.

Colorado Mortgage rates are down 0.75 percent since mid-April.

See Today's Colorado Mortgage Rates & find out more about getting a Colorado Home Loan

RJ Baxter First Mortgage Corp

Branch Manager

303-670-0137 (direct)

27902 Meadow Drive, Suite 120

Mortgage Underwriting Guidelines Easing Up?

RJ Baxter (First Mortgage Corp) — Tue, 24 Aug 2010 16:21:15 -0400

The tightening in mortgage-lending policies that characterized the last 3 years appears to be slowing.

According to the Federal Reserve's quarterly survey of senior bank loan officers, roughly 1 in 10 lenders added mortgage qualification hurdles between April and June. It's a huge departure from just 2 years ago when the mortgage industry was facing its first wave of challenges.

During that period, eight in 10 lenders added hurdles.

For mortgage applicants in Denver , this quarter's Fed survey results signals that mortgage lending may have reached its limits of restriction.

Since 2007, mortgage guidelines have become increasingly restrictive. There's extra scrutiny on assets and tax returns; employment history is given more weight; loan purpose matters. There's a bevy of traits that can stand between you and an approval that didn't exist a few years ago.

That said, lots of homeowners are still getting loans.

Verifiable income, good credit scores and equity are the "magic formula" and banks want to lend to good credit risks. And the best news for those that qualify is that mortgage rates are fantastic right now.

According to Freddie Mac, mortgage rates are as low as they've been in history.

So, if you're among the many wondering if now is the right time to buy a home -- or refinance one -- remember that, although mortgage guidelines likely won't get worse, mortgage rates probably will.

See Today's Colorado Mortgage Rates & find out more about getting a Colorado Home Loan

RJ Baxter First Mortgage Corp

Branch Manager

303-670-0137 (direct)

27902 Meadow Drive, Suite 120

FHA Underwater Refinance Program is Here

RJ Baxter (First Mortgage Corp) — Tue, 10 Aug 2010 07:22:23 -0400

As part of the government's Making Home Affordable Refinance program, a new program has been released that is aimed toward helping millions of underwater home owners refinance their mortgage and stay in their homes.

The plan, set to be launched on September 7, will allow non-FHA borrowers to refinance into an FHA mortgage at 97.75% of their home's appraised value, with the mortgage balance being written down, or forgiven, to bring the balance down to that ratio.

However, there is one aspect of the program that is problematic, and may make it difficult for many people to qualify. The plan requires the home owner's current mortgage lien holder to write down the mortgage by at least 10%. The success of the plan depends on the willingness of mortgage banks to write down their debt. Undoubtedly, there will be incentives for banks to do so, but that doesn't mean that they all will participate, or that even any will participate.

Regardless, this plan is a ray of hope for millions of responsible home owners who are underwater and have refused to allow their homes to go into foreclosure or short sale.

The FHA Underwater Refinance program will require that the home owner is current on his or her payments and must meet certain qualifying criteria. Beyond the requirement of the current mortgage holder to write down the debt, the qualifying factors are not much different than qualifying for a traditional FHA Mortgage, so many people, especially those with a stable job and decent credit, should qualify.

For more on this program, here is the full FHA Mortgagee Letter 2010-23.

See Today's Colorado Mortgage Rates & find out more about getting a Colorado Home Loan

RJ Baxter First Mortgage Corp

Branch Manager

303-670-0137 (direct)

27902 Meadow Drive, Suite 120

Despite Friday spike, Colorado Mortgage Rates Remain at Historic Lows

RJ Baxter (First Mortgage Corp) — Mon, 23 Aug 2010 08:20:27 -0400

Another week, another new low for conforming mortgage rates. In fact, this week marks the 9th time in a row it's happened.

Colorado Mortgage Rates last week were (again) at their lowest levels in history. This despite a slight spike up to end the week last week.

The data comes from Freddie Mac, a government group and major loan securitizer for the U.S. mortgage market. Freddie Mac's weekly survey is among the most widely-cited reports on mortgage rates and is the data used in home affordability models, among other statistics.

The 30-year fixed rate is averaging 4.42% nationally with an accompanying cost of 0.7 points. 1 point is equal to 1 percent of the loan size. This week's reported rate is lower by 0.02 percent from last week, and lower by 0.70 percent from one year ago.

On a region-by-region basis, though, "average" 30-year fixed mortgage rates are different.

Northeast : 4.44 with 0.6 points
Southeast : 4.44 with 0.8 points
N. Central : 4.42 with 0.4 points
Southeast : 4.46 with 0.5 points
West : 4.35 with 0.8 points

But this isn't to say that mortgage pricing is better in, say, California as compared to Florida. Note that the West Region -- with the lowest average rate -- has the highest required points. This is because mortgage rates and mortgage fees move in opposite directions. The type of low-rate/high fee structure common in the West may be right for some home buyers and would-be refinancers, but may not be right for others.

What's important to remember is that, as a rate-shopper in Colorado, whether for a Colorado Refinance or new home purchase, it's always your choice on how your loan is structured. Banks offer multiple set-ups -- with or without points -- to meet every applicant's budget.

As Colorado mortgage rates continue to slide and touch new lows, it's an excellent opportunity to see what your lender can do for you. Low rates won't last forever.

See Today's Colorado Mortgage Rates & find out more about getting a Colorado Home Loan

RJ Baxter First Mortgage Corp

Branch Manager

303-670-0137 (direct)

27902 Meadow Drive, Suite 120

Mortgage Closing Costs Explained - Denver, Colorado

RJ Baxter (First Mortgage Corp) — Thu, 19 Aug 2010 09:56:59 -0400

How much does a mortgage cost? The answer depends on where you live. But no matter which your locale, chances are strong that you'll pay more for a mortgage in 2010 as compared to 2009.

According to Bankrate.com and its annual Closing Cost Survey, a typical $200,000, purchase mortgage now carries an average $3,741 in closing costs -- up nearly 37 percent from last year.

As defined by Bankrate.com, "closing costs" is defined as the sum of two numbers. The first group is labeled "origination charges", a category that includes such items as underwriting fees, application fees and processing fees. These fees are paid directly to the loan originator's company at the time of closing.

The second grouping of costs is labeled "third-party fees". Third-party fees include appraisals, credit reports, settlement fees and title searches -- items paid in connection with the loan, but not paid to the lending bank or broker.

It's unclear why mortgage closing costsappear to have escalated into 2010, but Bankrate.com suggest that recently-enacted federal lending laws are a culprit:

The new law requires loan officers to be accountable to a Good Faith Estimate's accuracy. Bankrate.com's prior-year surveys may have been "understated", therefore, because of a lack of accountability.
The cost of federal compliance is high, and banks may be passing on compliance costs to consumers

For more on Mortgage Closing Costs, visit my website. Visit our company website for a detailed estimate of Colorado Mortgage Closing Costs for a refinance or home purchase.

See Today's Colorado Mortgage Rates & find out more about getting a Colorado Home Loan

RJ Baxter First Mortgage Corp

Branch Manager

303-670-0137 (direct)

27902 Meadow Drive, Suite 120

Housing Starts Fade In July

RJ Baxter (First Mortgage Corp) — Wed, 18 Aug 2010 19:23:03 -0400

Sometimes, you need to look deeper than the headlines to get the news that matters. This basic truth's latest example comes from the July Housing Starts data, as published by the U.S. Census Bureau.

According to the newspapers, Housing Starts improved last month:

US Housing Starts Make Modest Rebound (FT)
Housing Starts Rise Slightly (MoneyWatch)
Housing Starts Tick Higher In July (MarketWatch)

However, these stories are speaking in terms of all housing starts -- not just the single-family ones. This is a major point of difference for home buyers in Evergreen because the most people don't buy the multi-unit homes and apartment buildings that's also a part of the Housing Starts data.

The overwhelming majority of buyers buy single-family homes and in July, as in the previous 3 months, the number of single-family housing starts fell.

In fact, single-family housing starts are down by nearly 25 percent since April and are now at their lowest levels since May 2009.

This is a much different message from the headlines above.

It's not surprising that single-family housing starts are down; builder confidence is down as well and the two metrics tend to trend in the same direction.

Furthermore, building permits for single-family homes fell in July, too.

As a home buyer, the drop in Housing Starts should help reduce housing inventory in the months ahead. This may lead home prices to rise because home values are based on supply and demand. For home sellers, falling starts should help reduce competition for buyers.

Each real estate market is unique and supply levels will vary from ZIP code to ZIP code. For up-to-the-minute inventory levels, make sure to talk with your real estate agent.

See Today's Colorado Mortgage Rates & find out more about getting a Colorado Home Loan

RJ Baxter First Mortgage Corp

Branch Manager

303-670-0137 (direct)

27902 Meadow Drive, Suite 120

Home Builder Confidence Falls Again; Home Buyers Gain Leverage?

RJ Baxter (First Mortgage Corp) — Wed, 18 Aug 2010 19:20:02 -0400

Home builder confidence in the newly-built, single-family housing market is down for the third straight month this month.

After reaching a 3-year high just 90 days ago, the National Association of Homebuilders' Housing Market Index is now at a multi-year low. It's since dropped by almost half.

As an economic indicator, the HMI's goal is to "take the pulse of the single-family housing market". It surveys home builders across the country and asks them to report on 3 facets of their business:

How are market conditions today?
How do market conditions look 6 months from now?
How is the prospective traffic of new buyers for new homes?

Responses are then collated, weighted, and presented as the Housing Market Index.

The August HMI reading of 13 is the lowest since March 2009.

Not surprisingly, the main reasons why HMI is down echo the main reasons why consumer confidence is down. Jobs growth continues to be weak; credit guidelines remain restrictive; and, home values are recovering slowly, pressured by distressed properties.

Builders report watching foot traffic stagnate and most likely won't want to be stuck with excess inventory into the fall and winter months. For home buyers in Denver , drops in builder confidence like this can be an excellent negotiation tool.

Builders may be more likely to offer incentives and/or price reductions into an uncertain economy, as compared to a strong one. Furthermore, weakness in home building indirectly drags mortgage rates lower.

This one-two combination can make for cheaper homes with cheaper monthly payments.

See Today's Colorado Mortgage Rates & find out more about getting a Colorado Home Loan

RJ Baxter First Mortgage Corp

Branch Manager

303-670-0137 (direct)

27902 Meadow Drive, Suite 120

Colorado Mortgage Rates - 8-16-2010

RJ Baxter (First Mortgage Corp) — Mon, 16 Aug 2010 12:53:37 -0400

Mortgage markets worsened last week, putting a pause on the mortgage rate rally that dates to mid-April. Colorado Mortgage rates rose last week and home affordability suffered.

The Refi Boom remains in full effect, but rates are not as dazzling as they were a week ago.

It's somewhat strange that colorado mortgage rates rose last week given the heavy dose of negative-bending news.

The Federal Reserve noted that the economy "has slowed"
New unemployment claims rose to a 6-month high
Retail sales -- excluding auto sales -- rose less than expected

Colorado Mortgage rates often to fall on such news, but last week, they rose. The biggest reason was weak demand on a new 30-year bond issuance from the government. In turn, that weakness spilled over into mortgage bonds, which pushed rates up.

This week, colorado mortgage rates could rise or fall -- it depends on how new data influences market sentiment.

Monday : Home builder confidence survey
Tuesday : Housing Starts and Building Permits; Producer Price Index
Thursday : Jobless claims; 2 Fed members make speeches

Keep a close eye on the housing-related data early in the week. It's widely believed that housing will lead the economy forward so a rebound in home builder confidence, or a jump in building permits, for example, should push rates even higher. Weakness

In the meanwhile, if you haven't spoken with us about a refinance, consider reaching out this week. Rates are lower than they've ever been in history and more people are getting financing than the news would have you believe. You can't know until you ask so make that call today.

See Today's Colorado Mortgage Rates & find out more about getting a Colorado Home Loan

RJ Baxter First Mortgage Corp

Branch Manager

303-670-0137 (direct)

27902 Meadow Drive, Suite 120